Problembob is considering buying a chains of cemeteries for, Ask an Expert

Accounting

Problem:

Bob is considering buying a chains of cemeteries for $440 million. Since the primary assets of the biz is real estate,bob's management has determined that they will be able to borrow the majority of the money needed to buy the business.The current owners have no debt financing but bob plans to borrow $320 million and invest only $20 million in equity in the acquisition.

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Question: What weights should bob use in computing the WACC for this acquisition?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91168196

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